Fraus Est Celare Fraudem: Definition and Meaning

"To conceal a fraud is to commit fraud."A aphorism stating that by concealing a fraud, one takes part in the fraud or commits another. Fraud is a criminal deception intended to result in financial or personal benefit, hence concealing any fraud or fraudulent conduct is illegal.

When The Court deems a situation or an argument to be ‘fraus est celare fraudem’, it emphasizes that concealing fraudulent activities is also considered a form of fraud itself. In essence, trying to hide or cover up fraudulent actions can be seen as an additional deceptive act, reinforcing the idea that honesty and transparency are essential in legal matters.

What is Fraus Est Celare Fraudem?

The phrase means concealing a fraud makes you part of another fraud.

The aforementioned phrase is used in a wide spectrum of cases starting from contract law to white collar crime like fraudulent transactions, insurance fraud, also law of torts and criminology.

Illustrations of Fraus Est Celare Fraudem

A contract can be said to involve the principle "fraus est celare fraudem" when one of the parties engages in deceptive actions during the formation, execution, or performance of the contract, and then attempts to conceal those actions to deceive the other party. This principle emphasizes that the act of concealing the initial fraud is, in itself, a fraudulent act.

Likewise, this principle can potentially be relevant in mortgage−related situations where deception or fraudulent activities are involved, and one party tries to hide or cover up those actions, suppose a person applies for a mortgage loan by providing false information about their financial situation, employment history, or the value of the property being mortgaged. Later on, the borrower realizes that they can't afford the mortgage payments and decides to take steps to conceal their initial deception. This could involve manipulating financial records, providing false information to the lender about their ability to make payments, or attempting to hide their financial struggles. In this scenario, the principle "fraus est celare fraudem" could come into play.

Important Case Laws

Lee vs. Kirkpatrick (N.J. Ch. 1862)

The court ruled that a person can only collect "the amount actually due on the mortgage at the time of the assignment." However, if the mortgagor conceals his/her equitable defense when asked for information, if he/she misleads the party by word or act as to the amount due upon the bond, nay, if he/she stands silently by and allows a party in good faith to pay his/her money and take over an assignment for its full value, he/she cannot later set up his equitable defense against the mortgagee's claim for payment of the entire debt'.

Venture Global vs. Satyam Computer Services Ltd. [2008(4) SCC 190]

The Supreme Court ruled in 2010 that concealing important and significant facts that should have been given to the arbitrator constituted an act of fraud. "Fraus est celare fraudem" When an award is influenced or influenced by fraud or corruption, it falls under 'failure of due process of law' and might be set aside. If the concealed facts revealed after the award's passage can be linked to the facts comprising or inspiring the award, such information are relevant in a setting aside procedure, and the award may be set aside as impacted or inspired by fraud.

Budhu Singh And Ors. vs The Board of Revenue and Anr. on 3 May, 1957

The learned counsel for the petitioners argued that the words "fraud, concealment, or misstatement of facts" in Section 12 of the Acquisition of Privileges Act could only refer to the claimant's right to obtain a declaration under Section 6, and that these issues had to be resolved while dealing with an application for cancellation. Assuming this is correct, the officials cannot be considered to have sole jurisdiction over the issue of tenancy.

Conclusion

Fraus est celare fraudem in turn helps us understand how law does not exist along with deliberate falsehood, which in turn implies fraud vitiates all.

Frequently Asked Questions

Q: What does fraus omnia corrumpit mean?

Ans: "Fraud corrupts all."The revelation of fraud invalidates all components of a judicial judgement, according to this theory.

Q: In law, what does fraus est celare fraudem mean?

Ans: "To conceal a fraud is to commit a fraud."A adage stating that by concealing a scam, one participates in it or commits another deception.

Q: What does the term fraudem mean?

Ans: When studied with depth fraudem means, in circumvention of the rules of law.

Q: What does Fraus Omnia Vitiat mean?

Ans: A Latin phrase is Fraus Omnia Vitiat. It means "fraud taints everything." The expression is frequently heard in the context of contract law.